Another Canada Debt Indicator: This Time, It’s Pointing Up Again

The appeal of rock-bottom interest rates apparently trumped warnings about excessive borrowing for Canadians in the last three months of 2012, with the average consumer’s non-mortgage debt increasing by nearly 6% from the same period in 2011, according to consumer credit rater TransUnion.

Consumer borrowing on average increased by more than 1,500 Canadian dollars ($1,502) in the fourth quarter of last year from the same period in 2011, TransUnion says. The increase was sharply higher than the 1% climb recorded in the final quarter of 2011, and the 5.6% increase in 2010.

The TransUnion data is the latest trying to gauge whether Canadians are minding warnings from the government and from the central bank to rein in household debt. The Bank of Canada recently suggested it thought household debt might be leveling off. Other watchers have also weighed in with forecasts that the rate of growth for consumer debt was at least slowing.

Record high levels of overall household debt are considered the key risk to the country’s stability by the Bank of Canada, which said in its policy statement two weeks ago that household “imbalances” were starting to improve and that it expected trend growth in household credit to continue moderating.

TransUnion says the rise in average debt was consistent throughout Canada, with every province experiencing increases except for British Columbia, which showed a marginal decline of 0.09%.

British Columbia’s drop was the most “eye-opening observation” from the data, said Thomas Higgins, TransUnion’s vice president of analytics and decision services.

“It should be noted, though, that British Columbia has the highest debt levels in the nation,” Mr. Higgins said in a release from TransUnion.

The largest year-over-year increases were in Alberta (11.20%), Quebec (9.39%), and Prince Edward Island (9.04%).

TransUnion said delinquency levels continue to remain low across all major debt categories. In credit-card borrowing, the delinquency rate was at 0.30% in the fourth quarter of last year, a 6.03% decrease since the same period in the previous year.

Delinquency rates represent the portion of all loans in a given category that have been delinquent for over 90 days. Delinquencies for lines of credit stood at 0.18% in the final quarter of 2012, down a substantial 8.92%.

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Canada Real Time provides insight and analysis into what’s making news in Canada, a country punching above its weight on the world stage thanks to its vast resources and strong banking sector. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, we take a look at developments in fields ranging from business to politics to culture. You can contact the editors at canadaeditors@dowjones.com